Don’t Blame Student Loans for Rising Tuition

“Let me begin with some personal background: I was a tenure-track professor and quit academia because of bad pay, worsening conditions, and general disgust at how universities were changing. I work in finance now.

So let me respond to this old libertarian chestnut. It sounds good, it feels good, and it’s completely wrong.

If federally guaranteed loans are causing a spike in available funds to colleges, why didn’t we see a spike in administrators back in the 1950s and 1960s, when these Federally guaranteed loans first became widely used? Why did this trend start in the late 90s, when the student loan infrastructure was pretty much the same as it ever was?

In the past, colleges have spent their excess funds on better professors, better research resources, and departmental expansion. This trend largely ended in the 1980s, with stagnation in the early 1990s. The explosion of admins began in the late 1990s, largely as the result of several moral panics (date rape, sexism, racism, cultural insensitivity), which themselves began as part of the culture wars over a decade before the admin expansion began.

Government-guaranteed loans exist in many countries, but those countries haven’t seen an explosion of admins.

Rising accountability, especially at the community college level, has caused a secondary expansion of admins with a new task: student retention. The problem here is that public institutions are increasingly being held accountable, and the measuring stick is graduation rates. The incentive to keep students in school and graduating has resulted in an explosion of admins whose job it is to email, call, and generally babysit students. There’s also grade inflation, but I won’t get into that.

What’s the takeaway from this? Your tuition is going up because of less government intervention, not more.Public schools used to be heavily, heavily subsidized by taxes, and in the past 15-20 years that has dwindled as Baby Boomers voted against funding their children’s futures. As a result, universities have risen their tuition fees to stay afloat. Yes, they could and should cut costs, but they haven’t–and probably won’t, because the accountability metrics they are measured against don’t encourage efficiency, it encourages high graduation rates.”